Let’s Understand Corporate Fixed Deposit Deeply

There is no denying on the fact that among numerous investment instruments available in India, Corporate Fixed Deposit is no doubt one of the least understood. However, not only one but, plenty of people in India have already burnt their fingers when it comes to investing in this financial instrument because of not having the in depth knowledge on it. As a result, this thing has led a fear among the investors that this instrument is dangerous and should be left alone. Perhaps, this is the right time to have a clear vision about Corporate Fixed Deposit.

What is a Corporate Fixed Deposit
When it comes to fixed deposit, banks are undoubtedly the biggest issuers in India. But, in addition to banks, numerous companies also provide fixed deposit, known as Corporate Fixed Deposit. In this, the deposit is placed by the investors with the company for a fixed time along with a prescribed rate of interest. In fact, plenty of companies offer higher rate of interest than banks, but when companies have an urgent need of cash, they offer deposit at competitive interest rate.

Know Your Eligibility for Corporate Fixed Deposit
A corporate fixed deposit can easily be opened by individuals or groups or individuals like companies. In the case of individuals, Indian residents and NRIs are eligible to open their corpoarte fixed deposit. Not only this, you need to provide few documents like ID proof-driver’s licence, PAN card, passport and so on along with a request to open the FD.

Features of the Corporate Fixed Deposit

  • It provides you with flexible tenure that ranges from 12 months to 60 months.
  • The maximum amount that you can deposit varies from one company to other. Moreover, in some companies you need to maintain a minimum sum of Rs. 2,000 whereas in some Rs. 25,000 or so on.
  • They are available to you with credit ratings that come from organizations such as CRISIL to describe how trustworthy is the deposit.
  • Once it gets opened, the additional deposits may be made into fixed deposit, according to the rule of the company.
  • The company will deduct the taxes at source, thus you can get the entire amount at maturity time.
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Corporate Fixed Deposit Interest Rates

  • Corpoarte fixed deposit interest rates are determined by the different tenure of deposit that ranges between 1-5 years.
  • The interest rates usually varies from 9.25%-10.75%, depending upon the tenure.
  • Many companies offer cumulative and non-cumulative interest rates.
  • Majority of the companies offer higher interest rates for the employees who open FDs with them.
  • In fact, sometimes the facility of higher interest rates may even be extended for the family of a company’s employee.

Taxation Aspect
Tax is deducted in corporate fixed deposit, if the annual interest is above Rs. 5000. You will not have the capital gains tax on these deposits.

Benefits of Corporate Fixed Deposit

  • It is available with credit ratings, hence indicating the quality of the deposit.
  • The interest earned via these deposits can be directly credited to an account or taken through a cheque.( it varies from one company to other)
  • You have the option to credit the interest to an account on a monthly, quarterly, half-yearly or even annual basis.
  • The interest earned from these fixed deposits help augment your personal income or can effectively be used for your future expenses.

(Updated on:31st October,2016)

Personal Loan Interest Rates March 2018
Bajaj Finserv 10.99% - 16.00%
Fullerton India 14.00% - 33.00%
HDFC Bank 10.99% - 20.99%
ICICI Bank 10.99% - 18.40%
IndusInd Bank 10.99% - 16.00%
Kotak Bank 10.99% - 17.99%
RBL 13.00% - 18.00%
Standard Chartered Bank 10.99% - 14.99%
Tata Capital 10.99% - 18.00%
Home Loan Interest Rates March 2018
State Bank of India/SBI 8.35% - 8.80%
HDFC 8.35% - 8.95%
Bank of Baroda 8.30% - 9.30%
LIC Housing 8.35% - 8.70%
PNB Housing Finance 8.35% - 8.70%
ICICI Bank 8.35% - 8.85%
Axis Bank 8.35% - 8.75%
Citibank 8.40% - 9.25%
Indiabulls Housing Finance Limited 8.35% - 11.25%
Kotak Bank 8.35% - 8.50%
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